This is the standard wording it provided: "My attorneys may transfer my investments into a discretionary management scheme. Or, if I already had investments in a discretionary management scheme before I lost capacity to make financial decisions, I want the scheme to continue.
"I understand in both cases that managers of the scheme will make investment decisions and my investments will be held in their names or the names of their nominees."
However, its guidance then went on to say there was no guarantee the investment provider would accept this wording, and an individual might want to seek legal advice.
Following this, there were mixed views in the industry about whether this wording was strictly necessary, and it broadly came down to the views of each provider’s compliance department.
If a provider was insisting on that wording being present but it was not present for a particular individual, the individual would need to revoke the existing LPA and set up a new one.
This was fine if the individual still had mental capacity but became a lot more challenging if they did not and would necessitate an application to the Court of Protection to add the authority retrospectively.
In March 2022, the OPG revisited its guidance, and it no longer says an individual needs to include that wording, which is good news. However, it does still say that legal advice may be necessary, and it reports that at least one major financial institution still requires it.
Anecdotally this seems to be the case, and it seems that some providers do still insist on the wording being present.
In terms of where that leaves clients and advisers, it may be sensible simply to suggest the client includes the wording if they currently use a DFM or might consider using one in the future. Certainly, there does not seem to be any drawback in including it.
Sign up for the ‘use an LPA’ service
So far, we have looked at how you set up a POA and what you can include in it. The next step is sending it out to third parties, and that is what these next two points are about.
In July 2020, the OPG set up a new online service called "use an LPA", which third parties such as banks and investment providers can use to verify an LPA rather than relying on seeing a paper version.
